MADHU BALA GUPTA,DELHI vs. DCIT, CENTRAL CIRCLE-31, NEW DELHI

Vide 10 grounds of appeal, the assessee has challenged not only the legality of the assessment order but also on the merit, i.e. the genuineness of addition of Rs.2,90,05,500/- under section 69 of the Income Tax Act, 1961 (‘Act’). Madhu Bala Gupta 2 3. The relevant facts giving rise to this appeal are that the assessee [Late Sh. Krishna Kumar Gupta (Date of 09.05.2021)] filed his original Income Tax Return (‘ITR’) of the relevant year on 31.12.2021 declaring income of Rs.48,66,480/-. The case was picked up for scrutiny; hence, the Assessing Officer (‘AO’) issued notice dated 30.06.2022 under section 143(2) of the Act to the deceased assessee (Late Sh. Krishna Kumar Gupta).

1 Meanwhile, search and seizure operations under section 132 of the Act were carried out on 06.01.2021 in Hans Group of cases, wherein various incriminating materials were seized. Based on the information received from the Ld. AO of the searched person, the Ld. AO of assessee initiated assessment proceedings under section 153C of the Act on 30.01.2023 in case of the assessee through legal heir. In response to the notice issued under section 153C of the Act, the assessee through legal heir filed the ITR on 13.02.2023 declaring income of Rs.48,66,480/-. The case was scrutinized and consequential assessment was done at income of Rs.3,38,71,980/- after making the addition of Rs.2,90,05,500/- as unexplained investment based on WhatsApp chat of Sh. Vaibhav Jain with Sh. Gopal Mittal (husband of one of the sellers; Mrs. Reena Mittal). During the search and seizure operations under section 132 of the Act on the premises of Sh. Parveen K Jain & M/s. Jainco Ltd. on 06.01.2021, the data of mobile phone of Sh. Viabhav Jain were forensically extracted, Madhu Bala Gupta 3 which revealed that Sh. Viabhav Jain had sent a WhatsApp message/ image relating to sale of property at 41, Shankar Vihar, New Delhi at Rs.8,00,11,000/- to Shri Gopal Mittal, husband of one of the sellers of the above mentioned property. As per the registered sale deed of the said property, the assessee had purchased the said property (50% share) along with his son for Rs.2,20,00,000/-. However, as per the above-mentioned seized WhatsApp data of mobile phone of Sh. Viabhav Jain, the actual purchase consideration of the said property was Rs.8,00,11,000/-. Hence, the difference of Rs.5,80,11,000/- (Rs.8,00,11,000/- minus Rs.2,20,00,000/-) was taxed in the hands of the assessee @ 50%. Dissatisfied with the assessment order, the assessee filed appeal before the Ld. CIT(A) but did not succeed. Hence, this appeal is here.

At the outset, the Ld. Counsel contended that the notice dated 30.06.2022 issued under section 143(2) of the Act to the deceased assessee was not legally sustainable. Hence, the same was dropped. Later, the assessment proceedings under section 153C of the Act were initiated on 30.01.2023 in case of the assessee through Legal Heir after recording satisfaction to do so. However, the consequential assessment initiated under section 153C of the Act, as per tabular details on first page of the assessment order, was completed under section 143(3) of the Act. Thus, the Ld. AR argued that the said assessment order was ab-initio void and thus, the same should be quashed on simple reasoning that the Madhu Bala Gupta 4 assessment initiated under section 153C of the Act could not be completed under section 143(3) of the Act. He placed reliance on the decisions of the Hon'ble Supreme Court in the cases of Abhisar Buildwell 152 Taxmann.com 26 and Jasjit Singh 458 ITR 437, the decision of the Hon'ble High Court in the case of Ojjus Medicate Pvt. Ltd. 161 taxmann.com 160 and the coordinate bench decision in the case of Akanksha Gupta in the ITA No. 3074/Del/2023 to submit that the assessment completed under section 143(3) of the Act was unjustified.

On merit (Ground Nos. 6-8), the Ld. AR submitted that the addition made under section 69 of the Act was also unjustified as the said property was not bought through any agent and the assessee had not any relation with Vaibhav Jain, Director of Jainco Ltd. who sent WhatsApp message to Sh. Gopal Mittal. It was further argued that the WhatsApp message had nothing to do with the assessee; Late Sh. Krishan Kumar Gupta as it was not signed and not sent to the appellant assessee (Late Sh. Krishan Kumar Gupta or his family members)/buyers. Hence, it was nothing but a dumb document. It was contended that in such a case anybody whosoever might have purchased that property at any price below the price of Rs.8,00,11,000/- mentioned in that WhatsApp message should have to face the similar assessment. It was further submitted that in violation of principle of natural justice, neither the said documents were provided to the assessee nor the opportunity to cross examine both persons between Madhu Bala Gupta 5 whom the said WhatsApp messaging had taken place along with all sellers of the said property though their statements had been considered as evidence for making addition of Rs.2,90,05,500/-.

The Ld. AR drew our attention to the satisfaction note dated 05.01.2023 recorded in 7 pages (Page 1-7 of the Paper Book-I) by the Ld. AO for initiating assessment proceedings for AYs 2015-16 to 2021-22 under section 153C of the Act. The Ld. AR questioned one satisfaction note recorded for 7 years though the material mentioned therein for one AY; i.e. AY 2021-22 only. He thus submitted that the Ld. AO had not applied his mind while recording the satisfaction note for initiating assessment proceedings. He therefore, prayed for quashing the assessment being void ab-initio as the said satisfaction note was not proper.

On merit, the Ld. AR submitted that the assessee (now deceased) had neither transacted through any broker nor paid any sum above than the sale consideration shown in the registered deed. Further, Vaibhav Jain in his submission filed before the Ld. AO had admitted that deal never happened through them (A copy of the said submission was filed before us). It was further submitted that the Ld. AO had not found any cash or cash trail in respect of alleged sum of Rs.2,90,05,500/-. The Ld. AR contended that no addition could be made on the basis of WhatsApp message in absence of any corroborative evidence and this contention of assessee was supported by following judicial pronouncements: Madhu Bala Gupta 6

The Ld. AR further submitted that no original document was recovered by search party from the premises of Praveen Kumar Jain and the image of kachi parchi has no evidentiary value. Reliance was placed on the decisions of the Hon’ble Delhi High Court in the case of Moorti Devi 2010 (9) TMI 1208 and Rasmi Rajiv Mehta 2024 (4) TMI 21. It was further submitted that the Ld. AO’s finding was on surmises and conjectures. Reliance was placed on the decision of the Hon’ble Supreme High Court in the case of Lal Chand Bhagat Ambica Ram 1959 (5) TMI 12 and the decision of Hon’ble Delhi High Court in the case of Dinesh Jain HUF 2012 (10) TMI 158. 9. In view of the above the Ld. AR prayed for relief on merit also.

On the other hand, the Ld. CIT-DR submitted that the digital evidence could not be compared with the physical evidence. Hence signature on digital evidence was not one of the requirements in the eyes of law. Shri Gopal Mittal is the husband of one of the sellers of the above- mentioned property and hence an interested party in financial matters for and on behalf of his wife as per the tradition prevailing in the society as WhatsApp chat in such matter was done between the parties determining the fate of financial transaction. He placed emphasis on the AO’s Madhu Bala Gupta 7 reasoning mentioned in para 8.1 and 8.2 of the assessment order while rejecting the assessee’s submission. 11. We have heard both parties and have perused the material available on record. We are first of all is deciding the juri ictional issue challenging the validity of assessment in consequent to the satisfaction note dated 05.01.2023 recorded in 7 pages for initiating assessment proceedings for AYs 2015-16 to 2021-22 under section 153C of the Act. We have perused the satisfaction note dated 05.01.2023 recorded in 7 pages and find that the satisfaction note revolves around one information; i.e. the payment of the above-mentioned sum of Rs.2,90,05,500/- (WhatsApp chat). However, in the end of satisfaction note, the Ld. AO had noted down that “In view of the above facts, I am satisfied that, this is a fit case for initiation of proceedings u/s 153C of the income Tax Act, 1961 for A. Y.: 2015-16 to 2021-22.” Thus, in view of the above categorical noting, we are of the considered opinion that the said the satisfaction note dated 05.01.2023 recorded in 7 pages for initiating assessment proceedings for AYs 2015-16 to 2021-22 under section 153C of the Act is not a valid satisfaction in the eyes of law. Hence, we hold that the assessment order is void ab-initio and consequent the impugned order too. Ordered accordingly. 12. Other grounds, in view of the above finding, have become academic; hence, these are not being adjudicated here. Madhu Bala Gupta 8 13. In the result, the appeal of assessee is allowed as above. Order pronounced in open Court on 17th November, 2025 (VIKAS AWASTHY) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER